Planetary's Medieval Madness remake does indeed use a BBB as a core CPU, connected to a driver board. I don't know exactly what it emulates, if it's emulating the original CPU or it's new code (I presume some emulation layer).
It's definitely an emulation layer. The original game was written in 6809 assembly language along with talking to custom hardware, some of it in an ASIC as well as an Analog Devices DSP for sound playback.
There's a branch of MAME called PinMAME that emulates this hardware, and that's what Planetary showed in their demonstrations.
The prototypes they once showed were using MAME running on a Beaglebone Black to emulate the old Williams hardware.